Auckland port unloads profit improvement

By Phil Boeyen, ShareChat Business News Editor

Tuesday 19th February 2002

Higher revenues and reduced costs have pushed Ports of Auckland's (NZSE: POA) profit up by 9% in the six months ended December.

The port company has recorded an interim surplus of $22.74 million compared with $20.9 million for the same period the previous year.

Total operating revenue rose to $78.07 million from $75.21 million previously and the group's earnings before interest and tax rose 9%, to $35.2 million. Ebit for the port operations was 10% higher at $30.6 million while operating costs fell 2% to $40.3 million.

Chairman Neville Darrow says the result is very pleasing and sets the company up well for the full year.

"Our core container-handling business continues to show steady growth, with productivity improvements and tight control on costs."

Container volumes, which contribute about 70% of the company's revenue, were up 6% to 301,333 TEUs, a figure that chief executive Geoff Vazey says is a milestone.

"It is the first time we have crossed the 300,000 TEU mark for a half year. Indeed it was only in the 1992-1993 financial year that we first handled over 300,000 TEU in a full year.

"Interestingly, transhipment containers rose 41%. Transhipments now make up a significant part of our container volumes. They are a very positive indication of hubbing by shipping lines linking their regular fixed-day services at Auckland."

Mr Vazey says the transhipment containers are coming in primarily from Europe, Asia and the US, and are loaded here onto vessels in Auckland bound for other ports in the Oceania region.

A 15% increase in vehicle imports also boosted the result, particularly in the second quarter, reflecting high demand to bring in used cars before new legislation restricting older models comes into effect in April.

POA also announced that it has established its first inland port, at Fisher & Paykel's (NZSE: FPA) East Tamaki site. There are also plans for several more inland terminals at strategic sites in the Auckland region.

"Containers will be shuttled to and from the Port of Auckland primarily at night to avoid peak traffic. Trucks are required to use the motorway system to reduce heavy traffic on city streets," Mr Vazey says.

Looking ahead the company admits that the global economic downturn is causing pressure on port businesses but notes that the local region is performing strongly in container trade.

Mr Vazey also points out that during the so-called Asian crisis the business proved it could perform well through a period of international disruption.

"The good news for Ports of Auckland is that we're increasing capacity without utilising expensive waterfront land. This means we can make better use of our port assets and defer some terminal extension expenditure."

An interim dividend of 12.5 cents per share has been declared, reflecting the company's new policy of paying out 75% of after-tax profits. The dividend compares to a payout of 9 cents per share for the same period the previous year.

The port says it is placing greater emphasis on ordinary dividends in recognition that many of its smaller shareholders invest in the company as a utility stock that produces regular and steady returns with reasonable certainty.

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